By Steve Moran
A recent survey conducted by NREI/NIC of senior living professionals showed that most respondents (65%) believe occupancy rates will improve over the next year. I think they are wrong. Here is why:
It is really tough to get much of a handle on what this survey data means if anything. An independent organization emailed invitations to participate in the survey to subscribers of NREI. They received 140 responses. And only accepted or included responses from individuals who were involved in “Seniors Housing”.
140 is not a very large number and without some understanding of who those 140 were, meaning capital providers, vendors, brokers, operators, pundits, I found myself mostly going “huh?, but I think they're wrong.
By their very nature senior living investors, owners, operators and capital providers are an optimistic bunch, otherwise, they would not be doing what they are doing.
I worry that too much of the industry is ignoring the threats to our business. The first obvious one is inventory growth; the second is affordability; the third is the perception or reality that senior living is not a very attractive lifestyle.
The last and most ignored is that there are a bunch of really smart people and organizations that are intent on figuring out how to serve seniors outside the 4 walls of senior living. And even seniors themselves are trying to figure out how to not consume what we are selling.
The Roommate Economy Could Do Serious Damage
Recently, The Wall Street Journal published an article titled No Cats, No Sleepovers: Boomers Become Housemates (the article may be behind a paywall) about how there is a growing trend of Boomers settling into house sharing arrangements. Right now it is mostly women who are doing this and mostly they are younger than the typical senior living resident.
They are doing this not because they want to but because they have economic necessity.
This is just one example of the kind of thing that could seriously deteriorate the real value of the expected bubble.
As an industry, we continue to see most new developments focused on the high-end market because that is where the margins are. But in doing this we are continuing to shrink the pool of potential residents. We continue to face the huge problem of being the place that no one wants to move to until they absolutely have to.
And . . . the big unknown and justifiable worry is whether or not Boomers will even come close to embarrassing senior living and their thing, with the early indications being a big fat NO.
There are two huge opportunities staring us in the face if we can figure it out. They will take a bold radical rethinking of what we are doing today:
I continue to believe there is money in low- and moderate-income senior living. There are some organizations out there that are doing some cool things in this area, though so far, there is not a single silver bullet.
For the first time in history, many people are facing the opportunity to answer this huge question: What are you going to be when you grow up? It is a question we all had to face when he hit adulthood, but today many of us will get the opportunity to again ask and answer that question as we come to the end of our first career path.
Senior living is in the unique position of being able to help seniors explore this question, but we are not yet there.
So. . . what do you think?